Published Article

OCC Clarifies Bank Authority to Engage in Certain Cryptocurrency Activities

March 1, 2025

On March 7, 2025, the Office of the Comptroller of the Currency (OCC) published a new Interpretive Letter 1183 that reaffirms a range of cryptocurrency activities are permissible in the federal banking system.

Interpretive Letter 1183 provides confirmation that “crypto-asset activities,” including custody of crypto-assets and participation in independent node verification networks such as distributed ledger and stablecoin activities, when conducted in a safe, sound, and fair manner and in compliance with applicable law, are permissible for national banks and federal savings associations. The letter also rescinds the requirement for OCC-supervised institutions to receive supervisory nonobjection and demonstrate that they have adequate controls in place before they can engage in these cryptocurrency activities.

In publishing Interpretive Letter 1183, the OCC announced that it rescinds its prior Interpretive Letter 1179 from November 18, 2021, which outlined a supervisory nonobjection process for banks that seek to engage in the cryptocurrency activities addressed in Interpretive Letters 1170, 1172, and 1174. Interpretive Letter 1179 had clarified that the activities addressed in the aforementioned Interpretive Letters were legally permissible for a bank to engage in, provided the bank could demonstrate, to the satisfaction of its supervisory office, that it had controls in place to conduct the activity in a safe and sound manner. Consistent with longstanding OCC precedent, Interpretive Letter 1179 provided that a proposed activity could not be part of the “business of banking” if the bank lacks the capacity to conduct the activity in a safe and sound manner.

The OCC determined that Interpretive Letter 1179 is no longer necessary since the OCC staff have continued to develop knowledge and expertise with respect to crypto-asset activities. The OCC takes the position that rescinding Interpretive Letter 1179 is intended to enhance transparency and encourage responsible innovation while reducing the burden on banks and the OCC. In light of rescinding Interpretive Letter 1179, the OCC stated in Interpretive Letter 1183 that it will examine the activities described in Interpretive Letters 1170, 1172, and 1174 as part of its ongoing supervisory process.

Interpretive Letters 1170, 1172, and 1174 remain in place as they were originally issued and generally cover the following topics:

• OCC Interpretive Letter 1170 (July 22, 2020), addresses whether banks may provide cryptocurrency custody services;
• OCC Interpretive Letter 1172 (September 21, 2020), addresses whether banks may hold dollar deposits serving as reserves backing stablecoins in certain circumstances; and
• OCC Interpretive Letter 1174 (January 4, 2021), addresses whether banks may (1) act as nodes on an independent node verification network (i.e., a distributed ledger) to verify customer payments and (2) engage in certain stablecoin activities to facilitate payment transactions on a distributed ledger.

Banks are expected to have strong risk management controls in place to support novel banking activities in addition to their controls for more traditional banking activities and products, and the OCC maintains this position in the news release that accompanied Interpretive Letter 1183. Interpretive Letter 1183 was published with the intent to reduce the burden on banks to engage in crypto-related activities while maintaining a strong federal banking system, and to ensure consistent treatment by the OCC, regardless of the underlying technology utilized.

Consistent with the updated position surrounding crypto-asset activities, the OCC also announced its withdrawal from participating in the Joint Statement on Crypto-Asset Risks to Banking Organizations (January 3, 2023), and the Joint Statement on Liquidity Risks to Banking Organizations Resulting from Crypto-Asset Market (February 23, 2023).

Reprinted with permission from the American Bar Association’s Business Law Today March 2025 Month-In-Brief: Business & Regulated Industries.